N.W. Halsey & Co. v. Merrick

Decision Date30 December 1915
Docket Number132.,131
Citation228 F. 805
PartiesN. W. HALSEY & CO. et al. v. MERRICK, Bank Com'r, et al. WEIS FIBER CONTAINER CORP. v. SAME.
CourtU.S. District Court — Eastern District of Michigan

Beaumont Smith & Harris, of Detroit, Mich., and Robert R. Reed, of New York City, for plaintiffs.

Grant Fellows, Atty. Gen., of Lansing, Mich., for defendants.

Before DENISON, Circuit Judge, and SESSIONS and TUTTLE, District Judges, pursuant to section 266 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1162 (Comp. St. 1913, Sec 1243)).

PER CURIAM.

Two years ago, the same three judges now sitting considered the Michigan 'Blue Sky Law' of 1913, and for the reasons stated in Alabama Co. v. Doyle (D.C.) 210 F. 173 held it invalid. No appeal was taken, but the Legislature of 1915 passed the substitute law which is now before us (Act No. 46, P.A. 1915). By the two pending bills and the various interventions, injunctions against the law's enforcement are sought by an issuing corporation and by corporate partnership, and individual dealers, all citizens of other states, and thus the law's validity is challenged by every kind of nonresident interest.

We do not doubt the jurisdiction of the court. See Ex parte Young 209 U.S. 123, 28 Sup.Ct. 441, 52 L.Ed. 714, 13 L.R.A. (N.S.) 932, 14 Ann.Cas. 764; Traux v. Raich, 239 U.S. 33, 36 Sup.Ct. 7, 60 L.Ed. . . .; Phoenix Co. v. Geary, 239 U.S. 277, 36 Sup.Ct. 45, 60 L.Ed. . . .; Michigan v. Baird, 173 Mich. 655, 139 N.W. 1030; Nolen v. Riechman (D.C. Tenn.) 225 F. 813.

It is not important to go over the same ground as before. Our conclusions then announced have been more or less completely approved-- in the Eighth Circuit, by Judges Smith, McPherson, and Pollock (Compton v. Allen (D.C.) 216 F. 537); in the Fourth, by Judges Pritchard and Dayton, Judge Woods dissenting, but not on these points (Bracey v. Darst (D.C.) 218 F. 482); and in the Eighth again, by Judges Sanborn, T. C. Munger, and Elliott (Sioux Falls Co. v. Caldwell, Attorney General of South Dakota, Nov. 18, 1915, without written opinion).

The only question now open is whether the differences between the laws of 1913 and 1915 justify any different result as to the latter. We think not, because we find no substantial changes in those respects which were held to be fatal. Some minor details have been corrected, but the new law, like the old, impresses upon interstate commerce a burden which is direct and which is beyond the limits of the police power.

The 1913 law suspended all deals for 30 days, and then, lacking actual objection, automatically withdrew legal objection. The new law forbids all dealings until after affirmative approval by the Commission. This approval would not, normally, be obtainable for several days, and it may be indefinitely withheld, without objection made or reason given, but at the mere convenience of the Commission. The change in the law has not diminished this burden, in directness or in weight.

Under the 1913 act sales were to be forbidden, if the Commission finds that the plan of business is unfair, or that the securities (a) are fraudulent, (b) will, in all probability, work a fraud upon the purchaser, or (c) will, in all probability, result in loss to the purchaser. The 1915 act in terms seems to eliminate the tests of unfairness and of probable loss, but in fact provides for disapproval, if the Commission finds:

'That the proposed plan of business of said investment company, or that its proposed contracts, stocks, bonds or other securities are fraudulent, or are of such a nature that the sale of such contracts, stocks, bonds or other securities would, in the opinion of said Commission, work a fraud upon the purchaser. ' Section 9.

Has there been any substantial change, or has the omission of the words 'unfair' and 'loss' left the statute unchanged in true intent and meaning? Obviously, the statute is not content to rest the Commission's condemnation alone on the fraudulent character of plan or securities. They must also meet the additional test whether, 'in the opinion of the Commission,' the sale of the securities would 'work a fraud upon the purchaser. ' To 'work a fraud upon the purchaser' must be something different from being 'fraudulent'; and the clause would seem to be difficult of interpretation, save for the aid...

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8 cases
  • Mississippi Power Co. v. May
    • United States
    • Mississippi Supreme Court
    • 3 d1 Junho d1 1935
    ...Falls Stock Yards Co., 242 U.S. 559, 61 L.Ed. 493, 37 S.Ct. 224; Merrick v. N.W. Halsey & Co., 242 U.S. 568, 61 L.Ed. 498, 37 S.Ct. 227, 228 F. 805; Quartette Music v. Haygood, 67 So. 211, 108 Miss. 755; Kneeland v. Emerton, 280 Mass. 371, 183 N.C. 155, 87 A.L.R. 1. The second count of the ......
  • Miss. Power Co. v. May
    • United States
    • Mississippi Supreme Court
    • 29 d1 Abril d1 1935
    ... ... 829; Bucher v. Federal Baseball Club of ... Baltimore, 101 A. 535; Howard v. Merrick, 27 P.2d 891 ... Mere ... proof of failure to perform a promise is not sufficient to ... 606, 47 L.Ed. 323; Hall v. Geiger-Jones ... Co., 242 U.S. 539, 61 L.Ed. 480; Merrick v. Halsey & Co., 242 ... U.S. 568, 61 L.Ed. 498; Caldwell v. Sioux Falls Stock Yards ... Co., 242 U.S. 559, ... ...
  • Oklahoma-Texas Trust v. SECURITIES AND EXCH. COM'N.
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • 5 d4 Janeiro d4 1939
    ...173, 182, 183; Wm. R. Compton Co. v. Allen, D.C.Iowa, 216 F. 537, 546; Bracey v. Darst, D.C.W.Va., 218 F. 482, 495; N. W. Halsey & Co. v. Merrick, D. C.Mich., 228 F. 805; Geiger-Jones Co. v. Turner, D.C.Ohio, 230 F. 233, 239. See, also, Hall v. Geiger-Jones Co., 242 U.S. 539, 558, 37 S.Ct. ......
  • Union Pacific Railroad Co. v. The Public Service Commission
    • United States
    • Missouri Supreme Court
    • 18 d2 Julho d2 1916
    ... ... 194; ... Railroad v. O'Connor, 223 U.S. 280; Laird v ... Railroad Co., 121 Md. 179; Halsey & Co. v ... Merrick, 228 F. 805; Bracey v. Darst, 218 F ... 482; Wm. R. Compton Co. v. Allen, ... ...
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